Italy’s 2027 Exit Tax: What the Draft Budget Bill Proposes for Individuals Moving Their Tax Residence Abroad

Italy’s exit tax for individuals is not yet in force. It is a proposal in Article 17 of the 2027 Budget Bill (disegno di legge di bilancio), tabled in the Chamber of Deputies. The provision would insert a new Article 307-bis into the Italian Consolidated Income Tax Act (the new TUIR, Legislative Decree no. 117/2026). It would tax unrealised capital gains of individuals who move their tax residence abroad after having been Italian tax resident for at least six of the previous ten tax periods, and who hold assets with an aggregate normal value (valore normale, broadly fair market value) of at least EUR 800,000. If enacted as drafted, it would apply where the loss of Italian tax residence takes effect on or after 1 January 2027.

This analysis is based on the proposed text and the accompanying technical report (relazione tecnica). The provisions may change during the parliamentary process, and several practical points are left to an implementing decree of the Minister of Economy and Finance.

Key points at a glance

• Source and status: Article 17 of the 2027 Budget Bill, introducing Article 307-bis TUIR. A proposal, not law in force.
• Taxpayers: individuals, simple partnerships (società semplici) and equivalent entities, and non-commercial entities.
• Residence test: Italian tax residence for at least 6 of the 10 tax periods preceding the transfer.
• Threshold: aggregate normal value of the relevant assets of at least EUR 800,000, measured on the last day of the tax period preceding the one in which the loss of residence takes effect (31 December 2026 for a loss of residence effective in 2027).
• Taxable base: the sum, asset by asset, of positive differences between normal value and tax cost; negative differences cannot be offset.
• Rate: the draft refers to the ordinary rules for each type of income; the technical report indicates 26%. A 48.08% inclusion applies to certain government and similar bonds.
• Payment: within 180 days of the date the loss of residence takes effect, or deferral by election (50% down payment plus guarantee) for 5 tax periods for transfers to EU Member States and 10 for other eligible States.
• Effective date: loss of residence taking effect from 1 January 2027.

What the new exit tax is and why it is proposed

An exit tax charges income accrued in a State before the taxpayer’s move deprives it of the power to tax it. Italy already applies one to businesses; the Budget Bill would extend the concept to those who do not carry on a commercial business, limited to miscellaneous financial income (redditi diversi di natura finanziaria). The aim is to tax gains that built up during Italian tax residence, so that they are not lost to the Italian tax authorities once the taxpayer is no longer resident.

The technical report estimates a potential revenue of EUR 13.47 million. On a prudent basis, it assumes that only 50% would be retained as down payments (or that all taxpayers would elect deferral), giving expected revenue of about EUR 6.74 million a year (EUR 3.37 million in 2027, because of the 180-day payment window). It also assumes that half of the down payments may be refunded, from the end of the five-year period.

Who has to pay the exit tax when moving tax residence abroad

Taxpayers covered

Article 307-bis applies to individuals. Paragraph 7 extends it to simple partnerships and equivalent entities that do not carry on commercial businesses, and to the non-commercial entities referred to in Article 82(1)(c). The heading of the new chapter (“exit taxation of persons not carrying on commercial businesses”) makes clear that businesses remain within the regime that already applies to them.

The six-out-of-ten tax periods test

The individual must have been Italian tax resident for at least six of the ten tax periods preceding the transfer. Someone with five years’ residence falls outside the rule, regardless of wealth. The text does not say how the test applies to simple partnerships and non-commercial entities, for which it was drafted with individuals in mind.

The transfer must also be genuine and must entail the loss of Italy’s taxing power. For Italian citizens struck off the population register and moved to low-tax jurisdictions, the presumption of residence in Article 2(3) TUIR continues to apply: until it is rebutted, residence is not treated as lost.

Who may be affected in practice

Entrepreneurs holding shares personally, investors with portfolios of securities and funds, professionals with equity interests and holders of crypto-assets may all be affected, as may foreign nationals who have completed six tax periods of Italian residence and consider a further move. The text contains no specific carve-out for shareholders of an operating company.

Which investments fall within the exit tax

The tax covers the miscellaneous financial income listed in Article 76(1)(d) to (i) of the new TUIR. By reference to that provision, the following are in principle included:

• shareholdings, whether qualified or not, including interests in limited liability companies;
• bonds, securities and other financial instruments;
• units in collective investment undertakings;
• derivative contracts and other relationships generating miscellaneous financial income;
• crypto-assets.

Real estate gains are not referenced, nor is income from capital such as dividends and interest, which is not capital gain. A euro bank account or deposit generates no capital gain and, by itself, produces no taxable base.

Some borderline cases remain open. For newer instruments, such as tokens other than traditional ones or decentralised-finance positions, it will need to be checked whether they fall within the TUIR’s notion of crypto-assets. A label alone is not a safe guide to inclusion or exclusion.

What is the EUR 800,000 threshold

The threshold relates to the value of the assets, not the amount of the gain. A EUR 900,000 portfolio with a EUR 20,000 latent gain exceeds it. The aggregate normal value is measured on the last day of the tax period preceding the one in which the loss of residence takes effect. Paragraph 2 ties the threshold to the assets “relating” to the income in paragraph 1, that is, those from which the Article 76(1)(d) to (i) income derives.

The text provides no tax-free allowance: once the threshold is exceeded, tax is computed on all positive differences, not only on the part above EUR 800,000. The threshold appears to be assessed at the level of each taxpayer, with no aggregation with family members’ assets.

One point should be kept distinct: the text refers to assets and rights, while the technical report describes the affected population in terms of financial wealth net of deposits. That description should not be read as narrowing the scope of the rule, which is set by the text. It remains to be clarified whether assets with a latent loss count towards the threshold, and likewise assets on which Italy retains taxing rights in any event.

How unrealised gains are taxed

For each asset, the normal value on the last day of the tax period preceding the one in which the loss of residence takes effect is compared with its recognised tax cost. Only the positive differences are added up: latent losses on other assets do not reduce the base. Tax is therefore due on gains not yet sold.

The income from bonds and other securities under Article 31 of Presidential Decree no. 601/1973 and equivalents, from bonds issued by States on the list referred to in the consolidated law on payments and collection, and from bonds of their local authorities is computed at 48.08% of its amount. The technical report summarises this category as “government bonds”; what governs scope, however, is the wording of the provision.

Numerical example (illustrative)

Assume a taxpayer meeting the requirements, with no other carry-forward losses and all income taxed at 26%. The example does not represent an actual case.

The aggregate value exceeds EUR 800,000 even without the fund. The tax is about EUR 41,500 (26% of 159,616). The EUR 20,000 loss on the fund does not reduce the base. With deferral, the 50% down payment would be about EUR 20,750.

What is the rate of the new exit tax

The text of Article 307-bis does not set a rate: it refers to the provisions ordinarily applicable to each type of income. The 26% figure appears in the technical report and is the ordinary rate of the substitute tax on the income under Article 76(1)(d) to (i), set by Article 304(1) of the new TUIR.

The picture is not uniform, however. For crypto-assets, Article 304(7) provides, for income realised from 1 January 2026, a 33% rate, reduced to 26% for euro-denominated e-money tokens; the reference in Article 307-bis to the ordinary rules should carry this difference over, although the text does not say so. For the bonds above, the 48.08% inclusion brings the effective rate to about 12.5%. The applicable rate may therefore vary with the nature of the asset.

When and how the tax is paid: standard term and deferral

The tax is payable within 180 days of the date the loss of residence takes effect. Alternatively, the taxpayer may elect deferral where moving to an EU Member State or to a non-EU State with agreements providing for adequate exchange of information and mutual assistance in the recovery of tax claims comparable to Directive 2010/24/EU. Election requires, within the same 180 days, payment of a down payment equal to 50% of the tax and provision of a suitable guarantee.

The rules do not define the content of the guarantee or which non-EU States meet the requirements; the implementing decree will have to clarify this. It is also not stated whether the election may cover only some of the assets.

What happens if I sell the investments after moving abroad

Where deferral is elected, tax is determined on a later disposal. On a sale for consideration, tax applies to the lower of the gain accrued at the reference date and the positive difference between proceeds and recognised tax cost; the down payment already made is credited. If an asset carried a latent gain of EUR 150,000 and is sold at an actual gain of EUR 90,000, EUR 90,000 is taxed; if the gain is EUR 200,000, EUR 150,000 is taxed.

Gifts, and transfers to controlled companies or entities, to family members and to companies controlled by them, do not benefit from this limit: tax remains due on the whole accrued gain.

When the exit tax is not due

The draft excludes the tax, with refund of any excess paid, in three cases:

• the assets are not sold within the deferral period (5 or 10 years);
• the assets pass on death during the deferral period;
• tax residence returns to Italy during the deferral period, for assets not sold.

From when the new rules would apply

The rule would apply to taxpayers whose loss of Italian tax residence takes effect from 1 January 2027. What counts is the date on which the loss of residence takes effect, not the date of the physical move: it depends on the criteria of Article 2 TUIR and on how the tax period is split, and the text does not explain how the two interact. For a loss of residence effective in 2027, the assets would be valued on 31 December 2026.

Open points and criticalities

Some issues are already visible in the draft; others will require decrees or guidance.

• Normal value: no method is given for valuing unlisted securities and interests in unlisted companies.
• Tax cost: it must be documented by the taxpayer; lack of proof may increase the taxable base.
• Losses: the text adds up positive differences only; it is unclear whether previously realised, carry-forward losses reduce the base, and how losses arising after the transfer are treated.
• Loss of taxing power: the condition needs to be better defined. For non-residents, Article 304(4) excludes from taxation the income under letters (e) to (h), but not under letters (d) and (i), and paragraph 5 keeps in the charge unlisted shareholdings deriving more than half of their value from Italian real estate. The text does not say whether the test is applied asset by asset or overall, and the rule includes government bonds in any event.
• Double taxation: coordination with tax treaties needs to be verified, as does whether the destination State recognises the tax value of the assets on entry.
• Guarantees and deferral: content of the guarantee, list of eligible States and practical operation of the election.
• EU law: the mechanism of the lower of accrued and realised gain appears consistent with the Court of Justice judgments in C-327/16 and C-421/16, but other features, such as the down payment and guarantee also for moves within the Union, remain to be assessed.

Frequently asked questions

Is the exit tax for individuals already in force? No. It is proposed by Article 17 of the 2027 Budget Bill, which would introduce Article 307-bis TUIR, and would apply only if enacted, to losses of tax residence taking effect from 1 January 2027.

How much wealth triggers the exit tax? Under the draft, an aggregate normal value of the relevant assets of at least EUR 800,000 on the last day of the tax period preceding the one in which the loss of residence takes effect. Once exceeded, all accrued gains are taxed, not just the excess.

Do I pay tax on gains if I have not sold my investments? Yes, under the proposal: accrued gains, being the positive difference between normal value and tax cost, are taxed. With deferral, payment can be postponed until sale.

Can payment be deferred? Yes, for moves to an EU Member State or to a non-EU State with adequate information-exchange and recovery-assistance agreements. A 50% down payment and a guarantee are required. Deferral lasts 5 tax periods for the EU and 10 for other eligible States.

What happens if I sell after moving, or return to Italy? On a sale, the lower of the accrued gain and the realised gain is taxed, crediting the down payment. If assets are not sold within the deferral period, or if residence returns to Italy within it, tax on the unsold assets is not due and any excess paid is refunded.

What is the rate? The draft refers to the ordinary rates and the technical report indicates 26%. Article 304 TUIR sets 26% for income under Article 76(1)(d) to (i) and 33% for crypto-assets (26% for euro-denominated e-money tokens). A 48.08% inclusion applies to certain bonds.

From when would it apply? To losses of Italian tax residence that take effect from 1 January 2027, if the text is enacted.